New law means that from April 2021 cartel conduct could be punished with up to 7 years' imprisonment.
What is a cartel?
A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, allocating markets, rigging bids or restricting output of goods and services. See more information on what is a cartel.
Example one: Market allocation and price fixing
Three businesses compete to sell farm machinery. They agree to allocate the areas that they could sell to by agreeing one business would only sell in the North Island and the other two businesses would only sell in the South Island. They also agree 6-monthly price increases and a “scoresheet” to make sure all of them stuck to the agreement.
This is a cartel involving market allocation and price fixing.
When does cartel criminalisation take effect?
The new law criminalising cartels comes into effect on 8 April 2021.
Any cartel agreement entered into after 8 April 2021 will be subject to the new law, including possible imprisonment.
If a cartel agreement was entered into before 8 April 2021, conduct after that date will be subject to the criminal legislation.
Consultation on revised Cartel Leniency and Immunity Policy
In preparation for this change we are seeking your feedback on our proposed revisions to our Cartel Leniency and Immunity Policy.
This is intended to provide clarity on how we will consider applications for leniency in relation to civil proceedings and immunity in relation to criminal prosecution.
In November 2020 we ran a free webinar that covered what you need to know about cartels and how the law change could affect you. We talked about:
how to spot cartels
how to avoid them
what to do if you’re involved in a cartel.
You can watch the video of this webinar below.
Example two: Bid rigging
A group of companies in the fire alarm and sprinkler installation business meet regularly meet to discuss tenders. They call it a “coffee club”.
Every tender, participants decide who will win the tender and submit prices just above the agreed winner. This makes the tender process look legitimate while ensuring bidders supply at higher prices.
This is a cartel involving bid rigging.
I think I’m in a cartel – what can I do?
You need to act fast.
The Commission can grant leniency to the first member of a cartel to approach us, provided they meet the requirements for leniency. That means you/your company will not be subject to court action from the Commission provided you fully cooperate with the Commission's investigation and proceedings. This is called leniency. See our Leniency policy.
The Commission’s Cartel Leniency Policy are being updated to incorporate changes needed as a result of cartel criminalisation. The Commission intends to publish a draft of the revised policy on its website for public consultation by the end of 2020.
Here we cover frequently asked questions about cartel criminalisation.
This is a living document and will be updated if and when further questions arise.